Just in time to observe its tenth year, the University of Michigan Private Equity Conference is changing its name to reflect the global expansion of its scope, content and reach.
“Our annual PE conference will henceforth be called the University of Michigan Global Private Equity Conference, and we will attract global participants in the private equity business to the University,” says David Brophy, finance professor and director of the Center for Venture Capital and Private Equity Finance, or CVP, at the University of Michigan’s Ross School of Business. This year’s event will be held on Oct. 8 and 9 on the Ann Arbor campus.
The Friday morning conference session at the Michigan Union will open with a panel discussion on private equity in China, led by Yi Luo, senior managing director in the Private Equity Group at Blackstone, and H. David He, partner and managing director at Pacific Alliance Group Asia Capital. Their commentary will provide a good overview of the alternative investment space in China as well as in Asia generally.
“Increasingly, private equity investors are adopting a more global investment outlook, based in part on the realization that the global alternative investment market is predicted to reach $7 trillion by the year 2020,” Brophy explains. “Since the basic transaction in that asset class is the venture capital and private equity deal, we’re seeing more involvement across a broader span of investors, including corporate VC and PE funds, hedge funds and PE funds devoted to growth capital investment. These players are making investments in other countries in financial assets as well as real assets, such as real estate and commodities.”
Increased entry by U.S. and North American private and institutional investors into overseas markets may bring greater balance to the global alternative investment arena, according to Brophy. “Our studies show that foreign investment funds and companies are entering our North American markets at a faster clip than our North American funds and companies are entering international markets,” he reports. “While this is not fundamentally unhealthy, it may indicate that opportunities for us are being missed.” PE investors can enter foreign markets in several ways: first, by investing directly in European, Asian and offshore funds that currently are operating in other countries; second, by investing in multinational corporations whose span of business operations is global; and third, by investing in companies that have set up in-house global venture capital and private equity funds to invest in developing businesses in foreign countries.
Closer to home, the burgeoning global private equity industry offers Michigan companies an opportunity to cross-sell their products in international markets, coinciding with the state’s efforts to encourage commerce with other countries. U-M students also gain a more direct conduit into employment opportunities at global PE firms where they have a built-in alumni advantage.
“The University of Michigan is well-represented in the management groups that populate the global private equity market,” Brophy says. “Through Finance 626 – Global Private Equity, we are teaching our students what they need to know to pursue successful careers in cross-border investment and actively helping them find opportunities.”
Global private equity investment is not without its trip points, however. Foreign taxes, regulatory policies, government interventions and difficulties repatriating profits are only a few of the hazards that can create an uneven playing field for outsiders. “Private equity is a ‘contact sport’ and not for the faint of heart,” Brophy observes. “PE investors are always looking for inefficient markets, because that’s where unusual opportunities arise. Investing overseas is similar to investing in the U.S. except that on our home turf, we have more awareness of and trust in our culture, business strategies and practices, government and regulatory agencies.”
Check out these other private equity events taking place on Thurs. Oct. 8. Ross Fireside Chat: PE consulting career panel and student meet & greet at the Ross School of Business (https://www.facebook.com/umfiresidechats/). Women Who Fund Forum designed to connect women-owned business leaders with women in the venture capital and private equity industries (http://www.bus.umich.edu/conferences/Women-Who-Fund/ViewConference.aspx).